The Spanish bank also indicated that its earnings would continue growing as Spain's economic recovery gathered pace.

The bank makes over half its profits in emerging markets.

It has relied heavily on its overseas business to offset woes at home during a property market crash and a long economic downturn that finally ended in the third quarter of last year.

Net profit grew 90% to €4.37 billion in 2013 from a year ago, but missed analysts' forecasts, as did net interest income (NII), a key measure of earnings from loans minus funding costs, which fell 13%.

Spain's economy grew for a second quarter in a row in the final three months of 2013, data showed today, and that recovery is slowly starting to feed through to banks' earnings.

"After several years of strengthening the balance sheet and capital levels, Santander is starting a phase of strong profit growth in the coming years," Chairman Emilio Botin said.

Santander's NII in Spain grew slightly in the fourth quarter compared with the third, echoing results from smaller peers that have benefited from falling deposit costs.

But Santander's bad debts as a percentage of total credit in Spain jumped to 7.49% at the end of December from 6.4% a quarter earlier. This was below a sector average of 13.08% in November, but higher than some analysts had expected.

The bank said that its net interest income fell in Latin America, down 15% in the fourth quarter from a year ago, but results had been hit by falls in the region's currencies against the euro. Some analysts were heartened by NII gains in Brazil compared with the third quarter of 2013.

Non-performing loans in Brazil, which had also been a recent concern for investors as the economy there stuttered, fell for the third quarter in a row.

Outside Latin America, where annual profits fell nearly 24% from a year earlier, Santander is making a push to grow in the US and in Britain.

Even though it has been conserving capital to be ready for Europe-wide banking health checks this year, the bank said it also plans to make investments in some businesses such as its UK unit in 2014, where it wants to expand commercial lending, despites its targets of €1.5 billion in group cost savings over the next two years.

However, a long-awaited initial public offering of its UK arm would not happen in 2014, Santander's chief executive Javier Marin said. He added that a restructuring of the business to focus more on small and medium-sized clients was progressing well.